POSITIVE ECONOMIC OUTLOOK

As one of the integral pillars of the South African economy, the short-term insurance industry is fundamental to the country’s financial prosperity. Without it, risks that enable economic growth and development could not be insured, thereby limiting growth and investment. It is therefore a key role-player in the broader financial sector and, as such, cannot exist independently from the South African economy.

This is according to Lizé Lambrechts, chairperson of the South African Insurance Association (SAIA) Board, who said at the SAIA’s recent Annual General Meeting that the challenging economic conditions and ever-changing technological landscape have demanded an increased level of innovation and collaboration from short-term insurers in recent times.

“Our role in facilitating commerce and enabling business growth remains paramount and I firmly believe that through continually working together to find innovative ways to address the challenges that face us, we will continue to add significant value to the broader financial services industry and society at large.”

Lambrechts acknowledged that the short-term insurance industry has not been spared the impact of the local economic downturn.

“Challenges, however, present opportunity; and, in order to effectively leverage off these opportunities, the SAIA has had to enhance its resilience and adapt to the changing environment,” she adds.

Denzel Bostander, guest speaker at the event and Deputy Registrar of Banks at the South African Reserve Bank (SARB), echoed Lambrechts’ sentiment around a rapidly changing environment, commenting on technological innovation and its impact on the regulatory environment. “FinTech, the integration of finance and technology, is continually disrupting the way consumers use financial services, and will continue to make a significant impact in the insurance industry.

“Innovative developments, such as the creation of a technology platform to enable insurance stokvels, have generated an opportunity for the insurance industry to evolve, and as regulators of the financial sector the Reserve Bank is therefore also transforming in order to meet the modern needs of the industry,” he said.

Bostander explained that the Financial Services Board and SARB have been working tirelessly to prepare for the implementation of the Twin Peaks model of financial sector regulation, which will see the creation of the Prudential Authority, as well as the transformation of the Financial Services Board into one dedicated market conduct regulator – the Financial Sector Conduct Authority.

“The Twin Peaks model will introduce a greater focus on improving collaboration amongst authorities, including the harmonisation of the financial sector regulatory bodies and the supervisory systems and framework,” he said.

As such, the relationship between SARB and SAIA is set to take on a new lease and continue to strengthen throughout the year – a mutually beneficial progression that is sure to elevate both parties’ involvement in the broader economic landscape, having a positive effect on not only the insurance industry, but also society at large.

Recognising this development, the SAIA has made fostering and building partnerships with all relevant stakeholders a key priority in 2016. “As an association we will also continue to engage with policymakers and regulators at the highest level to find amicable ways of ensuring the sustainability of the industry while still providing value to policyholders,” says Lambrechts.

She concludes that in the current social, economic and political environment in South Africa, finding solutions through collaboration is becoming more relevant than ever before. “Using the strengths of the industry and together with other financial sector stakeholders, the SAIA is committed to become more involved in the country’s broader financial discussions to find sustainable solutions for South Africa’s economic challenges.”